What does capacity look like? How can you develop capacity bottom-up? What is the driv-ing force behind successful capacity development? Does better capacity necessarily lead tobetter performance?

Questions of this kind are daily challengesfor practitioners, policy-makers and academ-ics working on capacity development.Despite the existence of an extensive bodyof writing on capacity development, theanswers are still not clear. For a start, theinternational development community haspaid relatively little attention to the why'sand how's of capacity development.Moreover, the bulk of the literature has beenwritten from the vantage point of an'outsider' supporting the organisationalchange processes and not from the perspec-tive of those involved in such processes.

It was this kind of reflection that prompted astudy entitled 'Capacities, Change andPerformance'. This study, led by ECDPM, iscurrently one of the main activities beingundertaken under the aegis of the Networkon Governance, operating under theDevelopment Assistance Committee (DAC) ofthe Organisation for Economic Cooperationand Development (OECD). A number oforganisations in developing countries areinvolved in the current work and feed thestudies with analysis and lessons learned.This issue of Capacity.org presents the firstcases that have come out of it.

The cases record and analyse stories told bymembers of a variety of organisations abouthow and why capacity develops. They focuson key or core capacities and the dynamics ofchange in them that produce good andsustained performance. Through their work,

the study team hope to identify promisingpatterns of action that support the develop-ment of capacity in a variety of environments.

Four case summaries are presented here,with an introduction to the study written byHeather Baser. The first article, by FranklinMcDonald, focuses on an innovative modelfor promoting change in the EnvironmentalAction Programme (ENACT) in Jamaica andexplains how this model differs from moreconventional approaches. Based on his expe-rience in India, Bangladesh and Pakistan,Niloy Banerjee dissects what it takes for anon-governmental organisation to bothsurvive and be sustainable, and examinesthe capacities that this involves. The thirdarticle, by Dr Vasantha Chase, looks at theinvestments required by the reorganisationof the Environment and SustainableDevelopment Unit (ESDU) of theOrganisation of Eastern Caribbean Statesand the role played by regional stakeholdersin supporting this process. The fourth contri-bution is an abstract of a study on how theLacor Hospital in Northern Uganda not onlysurvived, but became a centre of excellencein an environment characterised by civil war,epidemics and extreme poverty. Alongsidethese contributions, there is a brief list ofrelevant literature. Finally, we would like todraw your attention to the updatedCapacity.org website, which lists new, down-loadable resources from the CIDA (CanadianInternational Development Agency) extranetsite on capacity development.

Advancing the policy and practice of capacity development in international cooperation

a gateway on capacity development

In this Issue

• Introducing the DAC study on capacity 2

• A new model for promoting change:responsive entrepreneurship 3

• The capacity for survivalCapacity lessons from NGOs 6

• Investing in successful reorganisationA regional experience from the Caribbean 8

• Performance amidst conflict, epidemicsand poverty 10

• Selected bibliography 11

Issue 19 October 2003

Capacity development:the why's and how's

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The lack of capacity in low-income countriesis one of the main constraints preventingthem from meeting MillenniumDevelopment Goals and reducing poverty.But even people involved in capacitydevelopment activities have only a limitedunderstanding of how capacity actuallydevelops. Practical guidance on how tostimulate the process is equally scarce. Inaddition, though the terms capacity andcapacity development are in common use,interpretation of their meaning tends tovary from one setting to another.

As the welcome letter mentions, it is thiskind of reflection that has prompted a DACstudy entitled Capacities, Change andPerformance. The study seeks both toprovide practical guidance on capacity andcapacity development and, more specifically,to foster a better understanding of theinterrelationships between capacity,

organisational change and performance. Itaddresses such questions as:

• What is capacity? • What change strategies are effective in

developing capacity?• Does better capacity necessarily mean

better performance?• What can outsiders such as develop-

ment organisations do to encouragethe development of capacity andenhance performance?

The study assumes that all countries wish todevelop capacity. The methodology includesa survey of relevant literature, a review of aselection of existing case studies, and fieldwork on new cases. The case studies will bewritten from the perspective of thoseinvolved in processes of change, and not, asin most development literature, from thevantage point of a development agency

supporting them. The researchers hope todraw conclusions that will help to guide thework of organisations involved in capacitydevelopment, both international and local.

The heart of the analytical framework forthe case studies is the interrelationshipbetween capacity, change and performance.This dynamic is shaped by four factors,namely the external context, stakeholders,internal features and resources, andexternal interventions. These are set out inthe graph below.

The researchers plan to perform about 20field cases to assess how the process ofcapacity development works in both low-income and industrialised countries.Thesecases will pay particular attention to factorsthat encourage capacity, and examine howcapacity development differs from onecontext to another, and why efforts to

Introducing the DAC study on capacity

External context Stake-holders

Internal features andresources

External intervention

The simplified analytical framework

More details about the analytical framework of the study can be found in theMethodology of the study available at w w w.ecdpm.org

Core variables

Capacities

EndogenousChange andadaptation

Performance

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The Environmental Action (ENACT)Programme was set up to assist Jamaicanpublic, private and non-profit organisationsto improve their ability to identify and solvenational environmental problems. It was oneof the first donor-sponsored interventions inJamaica to make capacity-building its coreobjective. The programme falls under theNational Environment and Planning Agency,an executive agency of the Jamaican govern-ment created in 2001 under the Public SectorModernisation Programme. The Programmeis supported by both the Canadian and theJamaican governments.

ENACT works with a wide spectrum oforganisations, levels and tactics, all with thegoal of creating a critical mass of capabili-ties and performance improvements. Itsmodel for promoting change and develop-ing capacity provides a challenging contrastto more conventional approaches.

ApproachesOne of the most common approaches topromoting change is mainstreaming, inwhich policies and programmes are centrallydetermined and, at least in theory, applieduniformly. All operational staff are requiredto integrate activities relating to a newpolicy into their work and senior managersare expected to oversee this. The dynamic isone of supply and enlightened enforcement.The onus is on the targeted staff to comply.

A less intrusive approach is based on theprinciple of social marketing, in whichtargeted staff are seen as clients who arefree to buy into or at least accept theprogramme or service on offer. The empha-sis here is on persuasion or the creation ofdemand, on building awareness and oninducing officials to try something that haswider social benefits. The onus is on theprovider to make the case for the adoptionof the programme.

From the beginning, the ENACT Programmehas followed a different approach. Based onkey guiding principles developed withstakeholders during the planning phase,the ENACT team's intent has been toenhance the capabilities of others to deliverprogrammes that are supportive of sustain-able development. What was needed wassomething that was both demand-driven

A new model for promoting change:responsive entrepreneurship

develop capacity succeed in some contextsbetter than in others.The final report willidentify promising patterns of action tosupport the development of capacity andassess their relevance to other environments.

There are three main audiences for thestudy:

• the members of the donor communitywho are sponsoring it,

• people working in developing or transi-tion countries with an interest in capac-ity development, and

• organisations involved in cases whichhave a particular interest in learning.

The researchers are keen to seek thesegroups' views on their work and on how it canbe made more relevant.The study team alsohopes to engage in more focused discussionswith local networks, particularly in Africa.

The products of the study will include:

• A two-part final report, including thefindings of the case work and the litera-ture on the what, how and why ofcapacity and performance improvementprocesses, as well as the implicationsboth for those involved directly and forthe outside organisations supportingthem.

• Customised reports for specific targetgroups.

• A selection of case studies.• A compendium of tools and frame-

works.• A partially annotated list of resource

materials including literature fromthree main sources:- development cooperation literature on

capacity issues, e.g. the UNDP study onReforming Technical Cooperation;

- development cooperation literature oninstitutional development andmanagement;

- literature on management andorganisation e.g. organisationaldesign, core competencies andnetworks, most of which has beenproduced by the private sector.

• One or more training modules, depend-ing on demand.

We welcome your comments on the capacitystudy in general and on the articles includedhere. Background documents for the studycan be found on the complementary webpages of Capacity.org and on the ECDPM'swebsite www.ecdpm.org (Donor Reform).

By Heather Baser, ECDPM Programme Coordinatorand Study Leader, e-mail hb@ecdpm.org

Photo: ENACT According to John Robinson, a recent Canadian

High Commissioner to Jamaica, the ENACTProgramme ‘produces like crazy’.

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and suited to Jamaican conditions. ENACThas focussed on adding value to others'programmes. ENACT has developed aprocess to proactively nurture pockets ofenergy, interest and commitment and try torespond to the needs of the groupsinvolved. ENACT is as much responsive as itis proactive.

The ENACT team members used theirnetworks and access to people to seek outopportunities. In ENACT terms, this wascalled working with 'primacy processes' orthose activities that were already in place.The emphasis was on responding to real asopposed to 'constructed' needs, a pattern ofbehaviour that is new inside the govern-ment of Jamaica and within the interna-tional donor community.

New modelWhat emerged over time was an ENACTapproach that combined a variety ofelements into a coherent process. It bearssome resemblance to a venture fundmodel, in which initiatives come from theparticipants rather than the investor. It alsohas some similarities with consulting work,where enhancing the client's organisationaleffectiveness is the priority. It draws fromthe techniques of social marketing, in

which clients are introduced to ideas andpractices that generate a broader socialvalue. And finally, it includes an element ofpartnership in which both parties combinetheir resources to achieve a common goal.The term 'responsive entrepreneurship' maybest capture the nature of the ENACTapproach.

The ENACT experience leads us to think alittle more about the nature of 'demand'for capacity development. In the earlystages, much of the demand for ENACT'sservices was latent, in the sense thatgroups or organisations showed limitedinterest, but were willing to collaboratewith outside groups if approached appro-priately and directly. Later, this patternbecame more varied as ENACT staff cameinto contact with demands not directlyaimed at ENACT participation. Finally,ENACT received more and more specificrequests for it to participate in projectsand activities.

By 2003, all three patterns were in a shift-ing mix. Much of ENACT's effectiveness hasdepended on its ability to adapt manage-ment strategies to deal with a varyingpattern of demand over time. In some situ-ations and on some issues, the programme

has been more proactive and has soughtout latent demands. In others, especially asits credibility has increased, it has balancedsupply and demand.

PartnershipThe resulting relationships between ENACTand various groups frequently take the formof a partnership, with both sides contribut-ing ideas, resources and legitimacy. Mostinterventions rely on dialogue, facilitation,demonstrations, accommodation and somepersuasion. The partnership normally goesbeyond the traditional quick fix of a capac-ity assessment, followed by a short consul-tancy or an injection of resources. Instead,ENACT tries to become a co-creator ofresults by defining goals in terms of clientresults rather than consultant products andmatching the project scope to what theclient is ready to do. ENACT plays the role ofa catalyst or coordinator.

Most efforts at capacity development thatare unconnected to specific projects sufferfrom a lack of unallocated funds andprocess support, specially within the publicsector. Staff at the middle levels of govern-ment organisations cannot usually getaccess to seed money for services, work-shops, publications or expert advice. In theJamaican context, it is not easy to fundinnovation through regular channels. TheENACT team injects resources into thesystem by supplying small amounts offunding and advice, such as for workshopswith the Coffee Industry Board or for anenvironmental stewardship action plan fora particular agency. In such cases, ENACTacts as a capability investor trying to shiftthe balance towards innovation and organi-sational change. The organisations andgroups concerned must already havedemonstrated commitment and a willing-ness to achieve results. The provision offinancial resources thus follows resultsrather than precedes them.

ENACT does not take on controversial orpolitically intractable issues connected tothe enhancement of capabilities andperformance. Thus, it does not threaten theprerogatives, mandates or vested interestsof powerful groups such as public-sector

Photo: ENACT “Coffee Industry Board reviewing material for a Code of Paractice’. Workshop in Linstead (2001) toimprove environmental performance in the coffee industry of Jamaica.

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unions or central government agencies.Also, it does not press for the reform oflegislation governing environmental andsustainable development.

In some ways, ENACT is a stealthprogramme specialising in 'middle-up anddown' initiatives, i.e. addressing those inter-ventions largely controlled by senior andmiddle managers in the public sector whoride below the political radar screen.Although few of ENACT's initiatives repre-sent dramatic breakthroughs in capabilityand performance, they are increasinglyimportant on a cumulative basis.

Over time and through its partnerships, theENACT Programme has converged with andreinforced the major reforms underway inthe country. ENACT is part of the technicalteam advising the Cabinet on mattersrelated to environmental management andsustainable development. ENACT is also apartner of the Local Government Reforminitiative led by the Ministry of LocalGovernment, as well as of the Modernisationof the Planning Framework for Jamaica ledby the Ministry of Land and Environment.

The ENACT team's approach to publicisingits role and achievements is generally lowkey. On the one hand, it disseminates theENACT Programme image and 'brand'through documents, workshops and otherpublic events with the objective of bolster-ing the image of support, Jamaicanisationand partnership. On the other hand, theteam takes care to adopt a discrete profilein terms of taking individual orprogramme credit. Publicity for successesis passed on to partners through whomand with whom the ENACT unit works. TheENACT Programme Manager, in particular,is careful to avoid public attention. Toomuch intrusive or publicity-grabbingbehaviour is likely to undermine the verylegitimacy and credibility that are neededto be effective.

ConclusionIn conclusion, we believe that ENACT repre-sents a model of change that is both inno-vative and unusual. We hope that itprovides some food for thought for otherorganisations on how they might developcapacity for change, not only in the environ-mental sector, but in other areas as well.

By Franklin McDonald, Chief Executive Officer ofthe National Environment and Planning Agency,

Government of Jamaica,e-mail: fmcdonald@igc.org

For more information about the ENACTProgramme, please visit its website atwww.enact.org.jm or send an e-mail to:enact@mail.infochan.com.

References

• Shaffer, R. 2002. High-Impact Consulting:How Clients and Consultants Can WorkTogether to Achieve Extraordinary Results.S.I.: Jossey-Bass. This book espouses a style ofrelating to partners which includes defininggoals in terms of client results rather thanconsultant products, matching the projectscope to what the client is ready to do,aiming for rapid-fire success to generatemomentum, building a partnership toachieve and learn and, finally, leveragingresources and getting more results withfewer consultants.

• Morgan, P. Organising for Large-Scale SystemChange: The ENACT Case in Jamaica (draft).Mimeo.

Photo: ENACT“Wolmers Preparatory School creating it’s own environmental messages’. Workshop (2001) to launch a

set of six posters developed under the National Environmental Communications Campaign.

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The capacity for survivalCapacity lessons from NGOs

BackgroundNon-governmental organisations (NGOs)are growing increasingly important in thefield of development. They are diverse bothin terms of organisational form, structureand culture and in terms of the issues theycover. Correspondingly, the capacities thatNGOs need to deliver on their mandaterange across a broad spectrum. When asked,NGOs themselves list an interesting set ofcapacities that make them sustainable andeffective.

This article, emerging from research under-taken as part of a broader assessment ofcapacity development across a wide rangeof contexts and organisations, looks atNGOs from the inside-out - the capacitiesthat NGOs consider critical to their effectivefunctioning. With NGOs now deliveringapproximately 12 per cent of global flows ofaid and technical cooperation,1 it is clearlyuseful to understand their workings anddynamics.

This article draws primarily from the experi-ence of NGOs in the South Asia region, i.e.medium-sized to large organisations withannual budgets of a quarter of a million dol-lars and above, and employing anywherebetween 25 and a few hundred people.

The capacity for survival and sustainabilityThe capacity for survival is one of the funda-mental capacities that distinguish successfulNGOs. Organisations that worry about nextmonth's rent rarely accomplish their mis-sions effectively. More likely, they tend tosuffer significant distractions. In a recentpaper, a group of NGO leaders from aroundthe world listed 'sustainability' as the topchallenge in a heap of eight challenges facedby civil-society organisations.2

The implications for capacity are straightfor-ward. The leadership must not only ensure

that the organisation survives in the shortrun, but also that it is sustainable in thelonger term. So there is a need for capacitiesto execute programmes and to keep build-ing the institution by hiring quality staff,deploying systems and hardware and, there-fore, finding predictable and sustainedsources of funding. Staffers in NGOs, as inother organisations, have legitimate con-cerns about their jobs and security of pay.Organisations that cannot demonstrate atrend of positive growth are likely to losetheir staff, with the best ones usuallydeparting first. Conversely, if a leadership isable to deliver on the above, the organisa-tion is usually well-placed to perform well inaccomplishing its core mission.

Inherent to the capacity for survival are cer-tain other elements that the leadership ofsuccessful NGOs demonstrate.

Capacity for survival: being 'donor savvy'The leadership of successful NGOs tends tohave a reasonable level of contact withdonors and a relationship of equality withkey staff at donor agencies. This ensures alevel of comfort on both sides and it is notuncommon to find donors lining up behinda leader because of the 'comfort', even if theperson is known to be autocratic, say.

Capacity for survival: mapping out agrowth path Successful NGOs are distinguished by thefact that their leaders have a very clear men-tal model of the organisation and its mis-sion throughout its life cycle. This allowsthem to retain a degree of flexibility to addmodules as opportunities arise, i.e. to reapwindfalls. For example, in India, where therapidly globalising economy led to theadvent of large numbers of private corpora-tions in the 1990s, many NGOs have beenopen to partnerships with the private sectordespite having had long-standing ideologi-cal opposition to private capital.

Capacity for survival: a tactical approachto fundingMost donors' internal policies allow for verylittle support to grantees for institution-building. Some donors do not fund beyondtwo years. Some do not fund infrastructure.Others do not believe in funding a generalsupport endowment. Yet an NGO leader haslittle choice but to think in terms of build-ings (to avoid recurring rents), vehicles,salaries with steady increments (to retaincompetent staff), provident funds (a com-mon staff demand in countries with no statesocial safety net), accident insurance and soon.Then there is the need to demonstrate apossible career growth path to employees -again, with the aim of retaining the best.

Such compulsions require the leadership ofNGOs to be tactical in seeking donors, hedg-ing risks and spreading costs among donorsin a manner that takes care of the 'unfund-ables'. Besides these capabilities, the leader-ship needs to have a good 'antenna' for thegeneral funding environment.

Capacity for survival: the element of trustSuccessful NGO leaders often demonstratethe capacity to convince donors to allow thema certain degree of flexibility with the end-useof funding.This could entail, for example, thediversion of funds from a steady programmeto an emergency (say, floods), or committingresources to an activity that seems justifiablyimportant, but is not part of the agreed planbetween an NGO and its donor.

A host of other capacities also distinguishsuccessful NGOs. Many are key drivers ormembers of networks or network-likearrangements. The use of networks hasproven to be a strategic 'force multiplier' inobtaining wider outreach.

The capacity for being perceived as legitimateSuccessful NGOs have an informal sphere ofcredibility in the constituencies they serve.

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For their constituents, NGOs embody theoptimism that prevailing status quos willchange. This legitimacy comes from demon-strating capability and leadership in a num-ber of areas e.g. intellectual capability, capa-bility for empowering, capability for rhetoricagainst a status quo, capability of ensuringfunding, and so on. Internally, the legitimacyderived from imagery ('the leader travelsoverseas, meets many important people,knows many donors on first name terms,etc.') also plays an important part.

The capacity for political neutralityPart of the legitimacy question derives fromthe capacity for maintaining equidistancefrom political parties of different hues whileengaging in work that is essentially politicalin nature. There is, however, a caveat in thatthe need to be neutral is highly context-spe-cific. While development-oriented NGOs inIndia need to demonstrate political neutral-ity, in Pakistan and Bangladesh, an elementof political dexterity is more important thanstrict neutrality.

Capacity for breakthrough under adversity:the key informal innovationOver the decades, many successful organisa-tional performances have hinged on keybreakthroughs either in concept or inprocess. These innovations have then beentaken to scale by others adopting thesebreakthroughs and mainstreaming them.For example, Grameen Bank's innovation oflending on the guarantee of peer pressurerather than against collateral; theBangladeshi, Thai and Indian examples ofusing religious leaders to spread successfulcontraception messages; the Brazilian BolsaEscola innovation of paying mothers ratherthan the school system a subsidy for educa-tion, all fall in this category.

Many highly successful programmes andinstitutions demonstrate this capability atsome stage in their organisational lifecycles. The key informal innovation usuallyinvolves a novel 'tweak' to an existing (andaccepted) paradigm, including sometimesturning it on its head. This also has implica-tions for the legitimacy of the leader. Often,the leader is the one to whom the staff willturn when faced with an intractable prob-

lem. This pressure has often led to path-breaking, locally appropriate innovation -sometimes with globally acclaimed results.

Capacity for delivering on diverse donorand (national) statutory requirementsSuccessful NGOs are characterised by anamazing degree of capability in their admin-istrative structures for delivering on multi-ple requirements. As in the world of bilateraland multilateral aid, donors to NGOs imposemultiple budgeting, reporting and auditingrequirements on grant recipients.

The national government also demandscompliance with local statutory regulations.In India, for example, this includes preparingand filing an audited balance sheet; a formfor the Ministry of Finance on grant utilisa-tion (including grants from all sources) tokeep grants from being treated as 'income'and hence attracting income tax; and a dis-closure to the Ministry of the Interior speci-fying the amount, source and end-use of allfunds of foreign origin. Each of these is acomplex exercise. Additionally, frequent tripsneed to be made to government offices inorder to release tranches of agreed grants.

Capacity for harmonising diverse groupidentities and aspirations In a number of countries in Asia and Africa,

the highly stratified nature of society isreflected among the poor.The poor continueto have factional, i.e. caste-based, tribal andethnic, identities and aspirations that distractthem from their primary aspiration of movingout of poverty.These also create competinginterest groups among the poor that diluteeffective action.The capacity to manage dis-parate group ambitions and harmonise theseunder a general plan for alleviating poverty isa key requirement for a successful NGO.

Whilst this article is based on broad general-isations, this discernible set of commoncharacteristics is valid across many NGOs indifferent countries.

1 Second Round Table on 'Reforming TechnicalCooperation for Capacity Development', Turin,UNDP, 2001. http://capacity.undp.org

2 Paper of the Civil Society Group, First meeting ofthe Resource Network on HIV/AIDS,Johannesburg, UNDP, 2003.

By Niloy Banerjee, Consultant,e-mail: niloy@vsnl.in

Reference

• Banerjee, N. A Note on Capabilities that makefor Success at the Level of Community BasedOrganizations (draft). Mimeo.

Photo: Sudhendu PatilMeeting of the Women's Cooperative Society in progress: Pairokar Vikas Samity", Jaipur, Rajasthan,

India.

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Although most - if not all - organisationsare reorganised and refocused from time to time, there is no guarantee that this willautomatically improve their performance.Surveys of US businesses undergoing reor-ganisations suggest, for example, that nomore than one third of them actuallysucceed. Here at the Environment andSustainable Development Unit (ESDU) ofthe Organisation of Eastern CaribbeanStates (OECS), the feeling is that we havesucceeded. But it has not been withoutblood, sweat and tears.

What follows is a summary of the ideaspresented in a case study performed by theECDPM, and of our own experience. Inpresenting it, I recognise the contributionsmade by many - the staff of ESDU, ourclients (largely OECS Member States), theorganisation's senior management and thefunders who support us. The reorganisationhas required imagination, effort, thought,discipline and staying power. In short, it hasneeded purposeful organisational invest-ment by all these parties.

The ESDU is located in Castries, Saint Lucia,and was founded in 1986 as the regionalimplementing arm for GTZ-funded projects(German Technical Cooperation). It hassince become a facilitating and bridgingorganisation responding to the needs ofthe nine OECS Member States.1 With a staffof thirteen, the ESDU has a simple organi-sational structure and adequate funding toimplement its second five-year operationalplan (2001-2006).

We have the advantage of having directand clear relationships with our key stake-holders, together with a supportive directorat the OECS secretariat. This helps to createincentives to meet the needs of theMember States and fosters an enablingenvironment in which we are encouragedto constantly improve our capacities andperformance.

At the same time, we have tried to main-tain our operating space by managing andbalancing the behaviour of our stakehold-ers - earning legitimacy and trust from theMember States, attracting outside support,restraining donor initiatives and usingoutside support to retain our independ-ence. Maintaining an enabling environmentis a crucial part of the capability andperformance puzzle.

The experiments we have performed withimproving our capacities and performancehave lasted for most of the seven-year periodfrom 1996 to the present. The changes imple-mented during this period have affected theorganisation's mandate, management styleand structure, and include:

• Taking ownership of the ESDU as anorganisation. We have reversed the alltoo frequent aid relationship (whereownership means compliance) andencouraged funding agencies to respondto initiatives we put forward and needswe express. We have also integrated twolines of strategic thinking into our work:first, the positioning view, to look at ourrole and potential contributions to theEastern Caribbean and, second, theresource-based view, to focus on ourcomparative advantage based on ourinternal resources and capacities.

• Crafting the organisation's role andcontribution. The ESDU is in the fortu-nate position of being able to concen-trate on the needs of one group ofstakeholders, i.e. the OECS MemberStates. They and the staff have gradu-ally developed a consensus about theorganisation's mandate as a facilitatoror bridge supporting the efforts of theMember States in utilising and manag-ing natural resources. We only performtasks which the Member States them-selves cannot carry out. The answer tothe question 'capacity for what?' istherefore clear.

• Aligning the organisation's direction anddesign. In order to enhance interper-sonal and interfunctional coordinationand communication, we have devisedan organisational structure that is virtu-ally flat, with overlapping job responsi-bilities. All staff are expected tounderstand the full range of the ESDU'sactivities. Each staff member blendsgeneralist skills, such as facilitation,with more technical ones, such ascoastal zone management. Ad-hocteams or quality circles are formedaround projects or problems.

• Recruiting and developing ESDU staff. Thecore of the group has remained in placefrom 1996 to 2003. Access to meaningfulwork rather than career opportunities iskey to this continuity. A culture of skillsacquisition in which staff acquire indi-vidual and organisational competencesthrough regular work has also played arole, and has been more important thanformal training.

• Creating a collective, team-basedapproach to our work. We have spent agreat deal of time getting our internaldynamics straight. A shared allegianceto personally held values such assustainable development and the

Investing in successful reorganisationA regional experience from the Caribbean

Peter Morgan, who did the case study forthe ECDPM, writes:

"For those who favour either the bloodtransfusion method of organisationalimprovement, i.e. injecting some institu-tional support here or there into an organ-isation in the hope of improving itsgeneral health, or the fast-food approach,i.e. a little training on the side, the insightsfrom the ESDU case provide an interestingnew perspective."

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potential of the Eastern Caribbean hashelped to create group cohesion. Theorganisation has not only reinforcedand validated these values, but has alsoprovided staff with an opportunity toput them into practice in their dailywork. This has given staff a continuingsense of professional purpose. In mostcases, the staff also agree on bothprogramme ends and organisationalmeans, most of which are symbolisedby the mission statement. In addition,we have made sustained efforts toreduce the disparities and segmenta-tion within the unit and to value thecontribution of all.

• Finding the right leadership style. Itwould be unthinkable to try to leadsuch an organisation using a commandand control approach or a hub andspokes model. Empowerment of staffthrough delegation and trust is critical.As the Head of the ESDU, I have had tolearn to avoid micromanagement. Staffhave had to learn to identify with theorganisation as a whole and to shareresponsibility for its overall manage-ment, i.e. to develop a sense of organi-sational citizenship. Decision-makinghas become more collective.

• Learning how to learn collectively. At theheart of enhancing capabilities andperformance lies some form of learningand unlearning. Staff, both individuallyand collectively, must learn both how toperform existing activities better andhow to perform new ones well. Theymust also learn to give up certain prac-tices that have long been effective. Ourstaff seem to need to learn constantlyand collectively. They spend considerabletime brainstorming about ways to solveproblems and improve working meth-ods. They try to learn about aspects ofthe organisation that are not part oftheir current work assignments.Learning is part of their real work andnot a supplement as and when timeallows. Learning focuses as much on thefuture as on the past and on capitalisingon opportunities as much as on solvingproblems. Learning thus extends beyondthe normal, safe technical issues to

social learning, i.e. how better to inter-act with colleagues in an effort toimprove everybody's performance.

• Generating an upward spiral of capabili-ties and performance. Organisations caneasily get locked into systemic patternsfrom which they find it difficult toescape. A few manage to generate anupward spiral that builds on strength.Here at the ESDU, we like to think thatwe fall into the latter category.Stakeholders, especially the MemberStates, have rewarded us by investingmore resources and more trust in theunit. Staff have responded by identifyingmore with the ESDU, and the OECS as awhole, and committing themselves to itsgoals and way of working. The unit'spsyche has grown stronger and moreexpectant of good performance. We havebecome our own enabling environment.

On the basis of the experience gained atthe ESDU, I would like to make somesuggestions that other organisations mayfind useful:

• Learn from inside the organisation. Thestaff of the ESDU already tacitly knew agreat deal about how to improve ourcapabilities and performance. The chal-lenge was to create an environmentthat would encourage these insights toemerge and be given serious considera-tion. Creating a climate for effectiveinternal dialogue and learning is criticalto improving performance.

• Don't expect even progress. Our experi-ence confirms what is now widelyknown about capacity developmentstrategies. They do not emerge in a fullyarticulated state. For the most part, theyare neither programmable nor linear.Ideas and action steps appear slowlyand in fits and starts. At the ESDU, wetried things out, experimented, arguedabout this and that, improved here andthere and, above all, built on improve-ments that appeared to work.

• Match supply and demand.Organisations can expand too fast andtry too many things. In our own case,

matching our supply with differentkinds of demand has been critical to ourstability and sustainability.

• Provide buffers. Small organisations orsub-units need to be carefully nurtured.We have attracted a degree of resent-ment and criticism from other groupswithin the secretariat, who feel they donot have as much access to resources andopportunities as we do. Our determina-tion, coupled with the support of ourstakeholders and the senior managementat the secretariat, have helped us to holdour course and maintain our capacity.

• Start anywhere. Asking 'where to start?'may prove to be a misleading question.For us, the answer was 'just aboutanywhere'. We tried something andlearned about the results. We developedmomentum. We got a sense of the over-all system at work. Then we tried againto intervene at those points where biggains could reasonably be expected.

While we have made significant progress atthe ESDU over the years, this has taken longerthan expected. Maintaining our strategicdirection during this period has requiredpatience on the part of our stakeholders, oursenior management, our colleagues in theother divisions and units of the secretariat,and our funders. It has also demanded a greatdeal on the part of staff who have had toperform for the Member States while goingthrough what are often demanding changesin approaches. The challenge for other organi-sations is to develop and nurture this kind ofadherence to purpose. More information on:http://www.oecs.org/units.htm

1 Grenada, Anguilla, Antigua and Barbuda, theBritish Virgin Islands, Dominica, Montserrat, St.Kitts and Nevis, St. Lucia, and Saint Vincent andthe Grenadines.

By Dr Vasantha Chase, Head of the ESDU,e-mail: oecsnrmu@candw.lc

Reference

• Morgan, P. Building Capabilities forPerformance: The OECS/ESDU Case (draft).Mimeo.

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St. Mary's Hospital (known locally as LacorHospital) in the Gulu District of NorthernUganda is a former Catholic missionaryhospital which is now fully integrated intothe Ugandan health system. The case studydescribes how the hospital has grown intoa centre of excellence, setting an exampleto the rest of the Ugandan health systemand helping to build healthcare capacity forthe whole country. With 470 beds, Lacor isthe second biggest medical centre inUganda. It is an extraordinary example ofcapacity development, adaptation andperformance in a region characterised by a17-year civil war, extreme poverty andoutbreaks of virulent epidemics.

Dr Piero Corti (from Italy) and his Canadianwife, Dr Lucille Teasdale, began the Lacorhospital in the early 1960s. Dr Corti formu-lated a clear mandate for the hospital: tooffer the best possible service to the largestpossible number of people at the lowestpossible cost. Dr Teasdale imprinted an atti-tude of care and love for patients on thestaff. The two founders' tireless dedicationand hard work has set an example for thestaff and developed into a value systemwhich still guides the hospital.

The full case study analyses the key compe-tences underpinning the hospital's excel-lent performance. Here are the five mostimportant:

• The ability to transfer the founders' valuesto others in the organisation. This inter-nalisation process takes place primarilyon the job, through the power of exampleand regular staff meetings. It is supportedby an incentive package and a manage-ment approach that shares responsibilityand involves staff at all levels.

• The ability to reproduce the organisa-tion. An inner core of some 15 to 20people supervise new staff membersand act as the guardians of the organi-sation's working culture and core

values. In addition and more on thetechnical side, the hospital makes anenormous investment in training, partlyas a means of attracting staff to anotherwise unappealing location.Thirteen to fifteen percent of theannual budget is reserved for training,including both in-house teaching andoutside training.

• The ability to adapt. The hospital's guid-ing principle is to respond to thedemands of its key stakeholders. Thisimplies learning processes that enablethe hospital to acquire knowledge, toreflect and to apply the lessons of expe-rience. It also means a rejection ofconservatism in the form of dogmas,old habits and outdated procedures.

• The ability to self-regulate. AlthoughLacor has established formal adminis-trative and professional standards, themanagement prefers to encourage thestaff to take responsibility for their ownperformance. Control systems play asecondary role.

• The ability to network and collect intelli-gence. Throughout the history of thehospital, contacts with the outside

world have been essential to under-standing the broader environment andsurviving in very different and at timesexceedingly difficult political periods. Inaddition, the hospital has been able tobuild contacts that have proved valu-able in raising operating funds tosubsidise operations.

This set of competences has evolved slowlyover the years and is tightly linked to thedeeply rooted value system. It has helped theorganisation to survive even during the mostdifficult times. Lacor was one of the fewhospitals in the world to deal successfullywith Ebola virus disease, even though itresulted in the deaths of 150 patients and theloss of 14 experienced staff, including DrCorti's designated successor. The hospital'sstaff and board are aware that they can over-come such adversities only by further devel-oping their capacities, maintaining their corevalues and stabilising their finances.

The case study, entitled Resilience and highperformance amidst conflict, epidemics andpoverty by Volker Hauck, is forthcoming andwill be available from the ECDPM's website:www.ecdpm.org (Donor Reform).Information on St Mary's Lacor Hospital:http://www.lhospital.org/index_eng.htm

Performance amidst conflict,epidemics and poverty

Photo: Brother Elio Croce, Lacor HospitalLacor Hospital new paed patients waiting for MD visit

The below list of books and articles contains someselected references taken from a much largerresource collection which is being put together insupport of the broader program of research carriedout by ECDPM for its Study on Capacities, Changeand Performance. The list tries to reflect the cross-disciplinary contents of its source and goes beyondthe usual suspects in the capacity literature. For themost part, the development cooperation communitymakes little use of the insights of other disciplines.This list assumes that insights into the complexprocess of organizing people into productive forms ofcollective action in developing countries can comefrom many sources in addition to the going strandsof thinking in the international development litera-ture. References are thus made to material fromthree main sources including the development coop-eration literature on capacity issues, e.g., the UNDPstudy on Reforming Technical Cooperation; the over-all development cooperation literature on institu-tional development and management; the globalliterature on management and organising, e.g.organisational design, core competencies andnetworks. Where available, links to full or partial on-line versions of some documents are included.

Baron, J.N., and M.T. Hannan. 20 02.

"Organizational Blueprints for Success in High-

Tech Start-Ups: Lessons From The Stanford Project

on Emerging Companies" California ManagementReview, vol. 44, no. 3.

This research looked at a provocative assumption:that in a period of rapid change ('Internet Speed'),systematic capacity building is an unproductivewaste of a leader's time ("during a hurricane, eventurkeys can fly"). The research looked at nearly 200technology start-ups in sectors such as computers,biotechnology and telecommunications. The resultsof the study reject the above assumption. Smallorganizations in the private sector turned out to bevery 'path dependent' meaning that the relevanceand direction of their early organizational blueprintsmattered a great deal in terms of eventual perform-ance. Capacity building, in short, turned out to bethe main event. A wonderful article for those inter-ested in organizational issues in the private sector.http://www.haas.berkeley.edu/News/cmr/baron.pdf

Dimaggio, P.J., and W. Powell. 1991. The NewInstitutionalism in Organisational Analysis. S.I.:

University of Chicago Press.

This is a dense, 400-page collection of academicarticles on the new institutionalism and its implica-tions for organisational analysis. Whilst it is clearlynot a book for practitioners, buried within it are

some genuine insights that have real explanatorypower for capacity development. Particular topicsof interest are the tension in most organisationsbetween symbolic and performance objectives andthe ways in which certain environmental factorssuch as rules, norms and social patterns of behav-iour affect organisational behaviour.

Fuchs, P.H. (et al.). 2000. "Strategic Integration:

Competing in the Age of Capabilities". CaliforniaManagement Review, Vol. 42, No. 3.

This article focuses on the issue of organizationalalignment and integration using data from anumber of American private sector firms. Thethesis here is that effective performance arisesfrom the ability of organizations to synthesizetheir positioning (i.e. direction, product/marketfocus) and executional capability (i.e. resources,operational capabilities and organizationalculture) into a cohesive strategy. In the view ofthe authors, it is the systems perspective and acombination of comprehensiveness and align-ment that accounts for good performance. Auseful reminder that a focus on the process of'capacity-building' by itself is not sufficient.http://proquest.umi.com/pqdlink?Ver=1&Exp=01-08-2008&FMT=TG&DID=000000054054058&REQ=1&Cert=D1%2f6uQVjSmmN6q%2bMUlpGjcrrhcjoniyKAcxaR2J7KzZPoIiY21NBDMXMIFugkOQ%2bdx24SqFCrqRW9Mf0EQLNUQ--

Grindle, M.E. 1997. 'Divergent Cultures: When

Public Organisations Perform Well in Developing

Countries', World Development, Vol. 25.

This article is based on a 1994 study for the UNDPthat looked at the factors driving effectiveness ina variety of public-sector organisations. The twoauthors found that the type of task, the salarylevels and the client had less impact on perform-ance than the nature of the organisationalculture. More specifically, the organisationalmystique, management style and operationalautonomy, particularly with respect to personnelissues, appeared to matter more.

Hesselmark, O., Un-Building Capacity: SomeCases from Africa, EGDI Working Paper 1999:1

A pithy little (15 pages) article that looks at thesystems dynamics of financial, organizational andhuman issues that can lead to the 'un-building' orthe collapse of capacity. The report focuses inparticular on the issues of lack of recurrent costs,politicization, donor exit strategies, externaldysfunctions and others that act against sustain-ability. Useful piece.

Horton, D. (et al.) 20 03. Evaluating CapacityDevelopment - Experiences from Research andDevelopment Organizations around the World. S.I.:

ISNAR, IDRC, CTA.

This book tries to explain how the ISNAREvaluating Capacity Development Project hasused an action-learning approach, bringingtogether people from various countries anddifferent types of organizations. It is based on sixcase studies of organizational capacity evalua-tions in Ghana, Cuba, Nicaragua, Viet Nam, thePhilippines and Bangladesh. As project teammembers conducted six evaluation studies overthe course of three years, project participantslearned a great deal about capacity developmentand the process of evaluation. The authors useexamples and lessons drawn from the evaluationstudies as a basis for making more generalconclusions regarding how capacity developmentefforts and evaluation can help organizations toachieve their missions.http://web.idrc.ca/ev_en.php?ID=31556_201&ID2=DO_TOPIC

More materials related to the ISNAR project at:http://www.isnar.cgiar.org/evaluation.htm andhttp://www.capacity.org/Web_Capacity/Web/UK_Content/Navigation.nsf/index2.htm?OpenPage

Johnston, M., and S.J. Kpundeh. 2002. Buildinga Clean Machine: Anti-Corruption Coalitions andSustainable Reforms (World Bank Institute Working

Paper). Washington: Word Bank Institute.

This is an excellent piece on encouraging organi-sational and personal change through the pres-sure of coalitions. In particular, the analysis of abroad repertoire of incentives to sustain suchcoalitions is one of the best anywhere. This work-ing paper can also be read with profit by practi-tioners interested in narrower capacity issues. Thispaper is clearly written and is a pleasure to read.http://www.worldbank.org/wbi/publications/wbi37208.pdf

Kaplan, A., 1997. Capacity Building: Shiftingthe paradigms of practice, Community

Development Resource Association publication.

Brief eleven page series of insights into organiza-tional capacity building. This article makes aconvincing case why conventional external inter-ventions, mostly funded by donors, so often missthe mark and produce little in the way of sustain-able organizational change.http://www.cdra.org.za/Publications/Various_Articles/shifting%20the%20paradigms.htm

Selected bibliography

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The European Centre for Development PolicyManagement (ECDPM) launched Capacity.org as atool for development researchers, practitioners anddecision-makers. As a website and a newsletter,Capacity.org combines information on capacity devel-opment policy and practice within internationaldevelopment cooperation with debate on policy issuesand practical experiences. It acts as a platform for dia-logue by providing a channel for informed review andsynthesis of the complex issues faced by developmentpractitioners and policy-makers.

Focusing on both the 'why' and the 'how' of capacitydevelopment, Capacity.org seeks to unravel the com-plexity of ideas and practices underpinning the term'capacity development'. To achieve this, the editorsparticularly encourage the exchange of perspectives

and experiences from the South, so as to ensure thatdiscussions are rooted in reality.

Our aim is to make Capacity.org a joint effort, mobil-ising and sharing a range of capacities and expertise.Interested individuals and organisations can helpmake Capacity.org an effective communication toolfor people seeking to alleviate poverty throughcapacity development by contributing information,lessons, ideas, opinions and feedback. Any offers ofco-finance or for linking up with related initiativesare very welcome.

www.capacity.org

This issue is one of the activities of the study onCapacities, change and performance executed underthe aegis of the Network on Governance of theDevelopment Assistance Committee (DAC) and withfinancial contributions from the Department forInternational Development (DFID), the CanadianInternational Development Agency (CIDA) and theMinistry of Foreign Affairs of the Netherlands (DGIS).

Comments, suggestions and requests should beaddressed to Volker Hauck,European Centre for Development PolicyManagement (ECDPM)Onze Lieve Vrouweplein 21,NL-6211 HE Maastricht, The Netherlands,Tel +31 (0)43 350 29 00, Fax +31 (0)43 350 29 02,E-Mail cb@ecdpm.org, website www.ecdpm.org

Kaplan, A. 1999. The Development ofCapacity. New York: United Nations Non-

Governmental Liaison Service.

This booklet (57 pages) is a classic statement ofthe organisational development approach tocapacity development, with particular relevanceto smaller, indigenous NGOs. It is a relentlessdissection of the dysfunctions of the conven-tional, project-oriented, technical assistance inter-ventions sponsored by the international donorcommunity. It makes a case for more facilitative,learning-based empowerment strategies thatrespond creatively to on-going processes. It alsocontains a useful analysis of the 'hard' versus'soft' elements of capacity and a plea for lessorganisational engineering and more systemsappreciation of organisational life. This is a usefulread for anyone who is about to design an inter-vention in support of capacity development.http://www.unsystem.org/ngls/documents/publi-cations.en/develop.dossier/dd.05/dc.contents.htm

Kerr, S. 20 03. "The Best-Laid Incentive Plans"

Harvard Business Review.This short (10 pages) article shows how perform-ance measures can easily assess the wrong activi-ties and in the process, provide incentives foremployees to game the system and reduce existinglevels of performance. Indeed, many of thedysfunctional practices outlined in the article arepresent in most current efforts at performancemeasurement systems in development cooperation- indicators (or 'vindicators') determined at a centrallevel by technical staff without lower-level staffparticipation or understanding, lack of awarenessof the games that certain measurement 'rules'

create, an undue focus on intermediary activities,an emphasis on information over communicationand education, an ignorance of the existing incen-tive system, a preoccupation with sort-term resultsand a decoupling of measurement activities frombroader issues of strategy and culture. Kerr's articleis a case study in dysfunctions.

Leonard, D.K. 1987. 'The Political Realities of

African Management', World Development, Vol. 15.

This is an insightful article from an author whohas spent a good deal of time and effort trying tounderstand the operational constraints facingAfrican managers. Leonard looks at the patron-client pressures on managers, on their constantsearch for legitimacy and external support, andtheir need for projects that can be both politicallyand developmentally productive. Leonard takesaim at the relentless technical rationality thatpervades donor approaches and its continuingrecord of failure in most organisational settings.He argues for capacity reforms that flow withrather than against the logic of African organisa-tional and social reality. This is a refreshing changefrom the regular fare of donor advocacy for various'lifeboat' solutions to capacity issues in Africa.

Letts, C.W., W.P. Ryan, and A. Grossman.1999.

High Performance Non-profit Organisations:Managing Upstream for Greater Impact. S.I.: Wiley

Nonprofit Series.

Most analyses of NGOs focus on their role and theirprogrammes. This book emphasises capacity-build-ing, i.e. creating and sustaining effective organisa-tions in the non-profit sector that can perform anddeliver these programmes. The authors look at qual-

ity processes, product development, benchmarking,human resources and effective boards and supervi-sion. The final two chapters are of particular inter-est, especially the comparison between NGO andprivate-sector approaches in the US to the mentor-ing of small, growing organisations.

Smillie, I., J. Hailey. 20 01. Managing forChange: Leadership, Strategy and Management inAsian NGOs. S.I.: Earthscan.

This study, funded by the Aga Khan FoundationCanada, looks at the reasons for the good perform-ance of nine NGOs in South Asia. Two of these arefrom Bangladesh, three are from India and four arefrom Pakistan. Among the management issues aris-ing from the analysis are relationships with govern-ments, the tension between formal and informalstructures, and between products and processes.

Ulrich, D., "Organizing Around Capabilities" in

Hesselbein, F., Goldsmith, M., and Beckhard, R..

1997. The Organization of the Future. S.I.: The

Drucker Foundation /Jossey-Bass Publishers.

A brief (7 page) article which tries to shift thefocus in organizational thinking away from theconventional categories such as structure, roles,systems and accountabilities and towards that ofcapabilities. From this perspective, organizationsshould be looked at as bundles or portfolios ofcapabilities that change over time to meetchanging needs. The article, in effect, calls forreversing most current assessment frameworks. Aneat summary for busy practitioners.

Compiled by Peter Morgan, ECDPM ProgrammeAssociate, e-mail: Morganpj@aol.com